There are only three ways in which you can raise profit margins and in turn profits. Each however has a varying degree of complexity and cost.
1. Increase margins of existing products or services to existing customers. This is significantly challenging without threat of loosing business. The best way to increase margins with existing customers through existing products or services is to reduce costs and streamline business processes.
2. Sell new higher margin products to existing customers. This is often the most appealing as existing customers already know and trust your company. As long as you are able to provide new products or services that are of value to customers, this is a viable option.
3. Sell existing products or services to new customers. Next to increasing margins to existing customers with existing products or services, this is the second most difficult way in which to increase margins, and the most costly.
With a better understanding of what we can do to increase margins, we transition to how we might use this information. Stay tuned for Part 2 of “Marginal Increase.”
© Shawn Casemore 2013. All rights reserved.